Anti-dilution

Definition

Investor insurance that says 'your loss is our gain' in math form. When a down round happens, this clause adjusts the math.

Example Usage

Our Series A has broad-based weighted-average anti-dilution; the Series B down round triggered adjustments to their conversion ratio.

Origin

Emerged in venture practice by 1980s; became formalized in term sheet templates by 1990s.

Fun Fact

Full ratchet anti-dilution can wipe out common shareholders entirely in a down round; most VCs now use weighted-average instead.

Source: Startup / Venture Capital vernacular

Related Terms

Beginner

growth stage

The phase when a startup has proven product-market fit and focuses on scaling revenue, typically raising Series B or C funding. Where dreams of changing the world meet the reality of quarterly revenue targets.

🚀 Startup / VC

Beginner

investor

Someone who gives you money in exchange for a piece of your company, future profits, or the thrill of watching their capital evaporate. They're either your best friend or worst nightmare, depending on whether your quarterly numbers are trending upward. In startup land, they're the people whose calls you always take.

🚀 Startup / VC

Advanced

participating preferred

Preferred stock that gets both its money back first AND participates in remaining proceeds with common stockholders. The 'have your cake and eat it too' of liquidation preferences.

🚀 Startup / VC

Beginner

product roadmap

A timeline of planned features that will be delivered late, if at all—your product team's creative fiction exercise. It exists primarily to give the sales team something to promise prospects that engineering will later disappoint.

🚀 Startup / VC

Advanced

cram down round

A financing round where new investors impose harsh terms on existing shareholders who lack the votes to block it. It's democracy in action, if democracy meant 'whoever has the most money wins.'

🚀 Startup / VC

Intermediate

co-sale rights

Also called tag-along rights, these allow minority shareholders to join a sale transaction if majority holders are selling their shares. The 'if you're abandoning ship, I'm coming too' clause.

🚀 Startup / VC

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